18June2018

Andaman Chronicle

The Daily Diary of the Islands

Abolish Octroi Tax in Andaman Islands

By Dr. Dinesh

I had written about this in Dec 13, 2011 to abolish Octroi in the media. The Romans called them “vectigalia” a tax which was levied primarily on wine and certain articles of food. Many Governments had abolished octroi in municipal councils in the year 1991.

Octroi tax is that, its incidence falls largely on the residents of the very city. Nearly a decade has passed since the ongoing tussle between the industries and the municipal corporations states in India either done away with or are into the stages of phasing out octroi. It sees to echo the thought that octroi must be abolished due to its various ill effects including the final distribution price. It is thus imperative to find alternative sources for funding the municipalities.

The octroi system, it is often termed to be “obnoxious” “vexatious” “wasteful” and “distorting”. The abolition of Octroi will not only help to attain economies on logistics and warehousing but will also make it a unified market. Octroi should be eliminated. Abolition of Octroi might result in some initial losses; it will be beneficial in the long run. This will not only ease interstate trade and generate more revenue but also impart some degree of uniformity to the tax system.

Octroi will further burden the poor people, and make a deep hole in their pockets, as the cost of living in Andaman is too high, due to transportation of commodities from mainland, sugar, edible oil, soaps, plastic goods, leather, textiles and ferrous metals.

There is apprehension among traders that unscrupulous elements will import cheap quality goods. The city will suffer as consumers will get poor quality commodities.

Port Blair Municipal Council should impose tax only for petroleum products, tobacco, liquor and new vehicles and should exempt octroi for other products, PBMC should amend the regulation, at the earliest possible. Different states have adopted different measures Tamil Nadu and Rajasthan had adopted by the abolition of Octroi. Punjab has done away with the tax completely without introducing any new tax. The Calcuta Municipal Corporation, the loss incurred from the abolition of Octroi was balanced by taking number of measures. In state of Gujrat Octroi was abolished in 2001, with the exception of six cities and later they came to know this was harming the cities where octroi was still being paid.

In 2007, the tax was abolished in the remaining cities as well. The then  Prime Minister of India, Dr. Manmohan Singh had asked to abolish octroi and even congress General Secretary Rahul Gandhiji had campaigned to abolish octroi by asking traders to send e-mail to his official address and around 9000 e-mails was received.

Shri. Bishnu Pada Ray, Member Parliament in Dec 3, 2011 had raised objection and had asked to abolish Octroi as “The islanders are facing problems due to inflation and rising price index”.

A Notification of Andaman and Nicobar Gazettee, No. 223, published on 16th December 1999 clearly says that ‘Personal apparel in use and not imported for sale’ and ‘Bonafide personal luggage and household kit that is not imported for sale’ shall be exempted from the levy of Octori, and terminal tax.

The trade bandh called on 28th October, 2014 by Andaman Chamber of Commerce and Industry is justified and hopes that Octroi is abolished in Port Blair soon for the benefit of the islanders.